DYNAMICS AND DILEMMAS OF REFORMS IN DENG'S CHINA

Analyzing China’s reform era under Deng Xiaoping, this article highlights the choreography of gradualism—dual-track pricing, special economic zones, and decentralization—that unlocked growth while generating coordination dilemmas. It explains how local experimentation under “crossing the river by feeling the stones” produced information for policy learning but also widened regional disparities and regulatory arbitrage. The discussion examines enterprise reform, fiscal contracting between center and provinces, and the emerging role of foreign capital as a catalyst for technology and management diffusion. Political implications—cadre evaluation incentives, factional balancing, and bounded tolerance for debate—are treated as integral to economic outcomes. The piece argues that reform durability depended on credible recentralization tools to rein in excesses without extinguishing initiative.

The body maps reform instruments to observed results. Dual-track pricing improved supply but encouraged rent-seeking; township and village enterprises expanded employment yet complicated environmental governance; SEZs accelerated export capability while deepening uneven development. Fiscal contracts strengthened local effort but strained macro control, prompting later tax-sharing reforms. The paper reviews credit expansion, soft-budget constraints, and the nascent financial system, showing how investment surges interacted with administrative guidance. Foreign direct investment is analyzed as a bundle—capital, technology, market access—with spillovers conditioned by local capacity and competition policies. Governance sections track cadre rotation, anti-corruption drives, and the politics of recentralization when inflation or overheating emerged. Comparative notes contrast China’s sequencing with shock therapy elsewhere, underscoring the merits and costs of gradualism. The article concludes that China’s reform dilemmas were not anomalies but the predictable price of transition, requiring continuous recalibration between experimentation, discipline, and legitimacy maintenance.